LAND STATUS, RIGHT TO BUILD (HGB), AND PMA INVESTMENT

• LAND STATUS, RIGHT TO BUILD (HGB), AND PMA INVESTMENT

Article 1

Legal Status of the Parties and the Land

1. The Parties hereby agree and declare that the SECOND PARTY is a Foreign Investment Limited Liability Company , previously established and existing under the laws of the Republic of Indonesia.
2. The Parties acknowledge and agree that, competent to Law No. 5 of 1960 concerning Basic Agrarian Principles (UUPA) and its implementing regulations, the SECOND PARTY is not permitted to hold Freehold Title (Hak Milik) over land in Indonesia.
3. The land which is the object of this Agreement is a parcel of land which is:
   • legally registered in the name of the SECOND PARTY under Right to Build (Hak Guna Bangunan – HGB) ; or
   • intended to be registered as HGB in the name of the SECOND PARTY
     (select as applicable to the relevant transaction).

Article 2

Duration of the Right to Build (HGB)

1. The Parties agree that the Right to Build (HGB) granted to the SECOND PARTY shall be subject to the following statutory terms:
   a. an initial grant of 30 (thirty) years ;
   b. an extension of 20 (twenty) years ; and
   c. a renewal of 30 (thirty) years ,
   in accordance with applicable laws and regulations.
2. The Parties acknowledge and agree that any extension and/or renewal of the HGB is not automatic and must be applied for by the SECOND PARTY to the competent authority in compliance with prevailing laws.

Article 3

Rights and Authorities of the PMA over the Land and Buildings

For as long as the HGB remains valid, the SECOND PARTY shall be entitled to:

1. Possess, use, and utilize the land in accordance with the approved business purposes and licenses;
2. Construct, own, and manage buildings erected on the HGB land;
3. Transfer, encumber, or mortgage the HGB with a Mortgage Right , to the extent permitted by law;
4. Lease or otherwise transfer control of the buildings to third parties;
5. Apply for extension and/or renewal of the HGB.

Article 4

Obligation to Maintain and Extend the HGB

1. The SECOND PARTY shall be fully responsible for:
   a. arranging and securing the extension and/or renewal of the HGB;
   b. fulfill all administrative, technical, and financial requirements; and
   c. submitting the application for extension no later than 24 (twenty-four) months prior to the expiration of the HGB term.
2. The FIRST PARTY shall provide reasonable administrative support as required, provided that such support does not contravene applicable laws and regulations.

Article 5

Legal Risks of the Expiration of the Right to Build

1. The Parties hereby agree that if the HGB:
   a. reaches the end of its validity period; and
   b. is not extended or renewed for any reason whatsoever,
   then the HGB shall be extinguished by operation of law in accordance with applicable regulations.
2. As of the termination of the HGB as referred to in paragraph (1), the SECOND PARTY shall no longer have any rights of control over the land, and the land shall revert to:
   a. the State; or
   b. the original land rights holder; or
   c. the holder of Management Rights (HPL) ,
   depending on the origin of the land title.

Article 6

Status of Buildings upon Expiration of the HGB

1. In the event that the HGB expires and is not extended, the SECOND PARTY shall be obliged to:
   a. surrender the land in vacant condition; and/or
   b. demolish the buildings at its own expense,
   unless otherwise agreed in writing by the Parties or specified otherwise by applicable laws and regulations.
2. The Parties agree that no compensation or indemnification shall be payable for any buildings left on the land, unless expressly agreed otherwise in writing.

Article 7

Investment Protection Clause

1. The Parties agree that all investments made by the SECOND PARTY have been undertaken with full awareness of the legal risks associated with the finite duration of the HGB.
2. The FIRST PARTY shall be released and discharged from any claims, demands, or liabilities arising from the expiration of the HGB, provided that such expiration is not caused by the fault or negligence of the FIRST PARTY.

Article 8

Legal Compliance and Regulatory Changes

1. In the event of any change in laws or regulations affecting the HGB, the Parties agree to:
   a. adjust the implementation of this Agreement accordingly; and
   b. execute an addendum if and as necessary.
2. Such adjustments shall not eliminate or diminish the principal obligations of the Parties under this Agreement.

Article 9

Final Provisions Specific to PMA

1. This Article constitutes an integral and inseparable part of this Agreement.
2. In the event of any inconsistency in interpretation, the provisions governing the Right to Build (HGB) and prevailing Indonesian agrarian laws shall prevail as the primary reference.